Fresh data suggests recession abating

By IBT Staff Reporter On 06/11/09 AT 9:32 AM

Sales at U.S. retailers rose in May and the number of workers filing new applications for jobless benefits fell for a fourth straight week last week, according to official data on Thursday that suggested the recession was abating.

The Commerce Department said total retail sales rose 0.5 percent, the first advance in three months, lifted by strong gasoline and building material receipts. Sales fell 0.2 percent in April.

A separate report from the Labor Department showed the number of U.S. workers filing new claims for jobless aid fell 24,000 to 601,000 in the week ended June 6, the lowest since January 24.

It looks like we are turning the corner. There is pretty clear evidence that the worst of the labor downturn has passed, but we still expect more job losses, said Zach Pandl an economist at Nomura Securities International in New York.

U.S. stock index futures briefly rose on the reports.

The reports bolstered the argument that the economy's severe recession was close to hitting a bottom, with growth likely to return in the second half of the year.

The sales report raised optimism that consumer spending would probably be flat to modestly lower in the second quarter, instead of falling sharply as expected by most analysts.

Spending, which accounts for about 70 percent of U.S. economic activity, rose 1.5 percent in the January-March period, after a 4.3 percent dive in the fourth quarter.

Still, retail sales were partly boosted by increases in gasoline prices, which could crimp consumers' wallets.

The tender green shoots could be snuffed out by the frost of higher mortgage rates and gasoline prices, said T.J. Marta, chief market strategist at Marta on the Markets in Scotch Plains, New Jersey.

Gasoline sales jumped 3.6 percent in May after dropping 0.8 percent the previous month. Excluding gasoline, retail sales rose 0.2 percent. Sales of building materials climbed 1.3 percent in May, the biggest advance since April last year, after falling 0.6 percent in April.

Soft spots in the report included sales of electronic goods, which fell 0.5 percent in May after declining 0.9 percent the previous month.

While initial claims for state unemployment insurance benefits declined for the fourth straight week, the number of people staying on the benefit rolls after collecting an initial week of aid rose to a record 6.82 million in the week of May 30, the latest week for which data is available.

It was the 19th week in a row so-called continued claims set a record, the Labor Department said.

The 4-week moving average for new claims, considered to be a better gauge of underlying trends because it smooths out week-to-week volatility, fell to 621,750, the lowest since February 14.

(Additional reporting by Mark Felsenthal in Washington and Richard Leong in New York; Editing by Andrea Ricci.)

A white Fiat van rammed into pedestrians outside enjoying a late afternoon stroll on Las Ramblas in Barcelona on Thursday killing at least 13 people and leaving hundreds injured. The Islamic State group claimed responsibility for the attack.